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tv   Nightly Business Report  PBS  October 8, 2014 7:00pm-7:31pm EDT

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this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by. >> featuring stephanie link who shares her investment strategies, stock picks and market insights with action alerts plus. the multi million dollar portfolio she manages with jim cramer. you can learn more music to the market's ears, stocks rally after the minutes from the last federal reserve meeting suggest policy makers are worried about slowing global growth. could that mean easier money longer? >> ebola economics, the world bank puts a price tag on the economic cost of the ebola outbreak and the number is huge. >> and oil slick, prices slide again, which is good for consumers, but bad for producers, so what happens as their profits get pinched?
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that and more tonight on "nightly business report" for wednesday, october 8th. good evening, everyone. well, call it a come back rally or maybe a janet yellen rally. whatever you call it, stocks had the best session of the year. the major averages surged after minutes from the federal reserve's latest meeting show the central bankers will be quote overly cautious about raising interest rates. they sited concerns about weakness in the global economy and impact of a stronger u.s. dollar, especially on inflation. investors bought up stocks, reassured that the fed is committed to keeping rates low until its convinced the u.s. economy has completely healed. the dow shot up 275 points, erasing all of tuesday's losses. the nasdaq rose 83, the s&p soared 3 three points. steve liesman has more. >> reporter: places like france and germany is being health here
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at the federal reserve washington head quarters and that could have an effect on interest rates. the fed in the minutes from the september meeting revealed concerns with floundering economies overseas saying quote, economic growth over the medium term might be slower than expected if foreign economic growth came in weaker than anticipated, end quote. that was not the extent of the concerns and mentioned the appreciating dollar, which has risen since july. the worry is a strong dollar will reduce inflation since foreign goods become cheaper when the green back strengthens. this is troubling to a fed that struggled to hit a 2% target and not succeeded. in fact, fed staff economists said it may not hit that over the next few years. >> the dollar's movements which reflects the monetary policy globally shows the fed and keeping to the timeline on rates is affecting markets which will affect the economy, combine with oil and you get a sense the fed
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will be worried about inflation being too low and pull the punch bowl away late, not early. >> reporter: that says fed officials won't be so quick to pull the trigger and raise rates. the market anticipates a mid 2015 rate hike that would be the first in eight years but there was concern of an earlier hike and the fed's worries about foreign weakness takes that off the table. this raises stakes for the european central bank to come up with a plan to address the economic weakness on the continent. they are trying to lower rates for private sector borrowers and the economy weakened further since the plan was announced. that could mean the fed keeps interest rates at zero until it's clear europe is out of recession danger or puts a plan together that gains the confidence of markets. for nig"nightly business report i'm steve liesman.
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more strong data, adp reports wage growth is finally picking up with hourly pay for private sector workers up 4.5% in the third quarter compared with a year ago. also today, the kansas city federal reserve reports more improvement in that region's labor market with the job's momentum indicator rising to near historic highs. small business hiring is among the biggest contributors to the improvement, as well as decline in the national unemployment rate. some good news out of washington, sort of. the congressional budget office says the federal deficit coming in under half a trillion dollars is the lowest since president obama took office in 2008. oil prices continued to slide today pushed lower by a department of energy report that u.s. crude inventory rose by 5 million barrels last week above forecast. domestic west texas crude fell another $1.54 a barrel and
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finished at $87.31 a fresh two-year low. how low can those oil prices go and how long before oil producers really feel the impact? jackie deangelis has more. >> reporter: oil prices have gotten crushed, good news for consumers because retail gas prices are dropping but bad news for global producers who are reaching critical break even points. now suppliers around the world forced to decide are these price fluctuations temporary or time to cut supply? some are saying not so fast, at least in the canada oil. a representative says no need to panic. >> if you look at the overall world supply cost and reports it's in the $70 range, we're in the high 30, low $40 range in the two main oil facility areas. we have a lot of value to generate and a lot of running room. >> reporter: according to some reports, the price to produce is 89 to 9 6 a barrel.
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here in the u.s. 70 to $77. so with wti well under 90, some are starting to feel the pinch and traders saying there is more pain to come. west texas intermediate could fall to $25. that is breached, the slide could continue. but suppliers aren't making any moves just yet. in canada the expectation is that output will continue to ramp but with the realization that recent growth will begin to trail off. >> there is a point where that's actually going to level off when we reach whatever maximum daily input could be taking into consideration all of the factors of development. >> reporter: what to watch for, opek is meeting next month. we've been talking about oil exports, perhaps the conversation heats up. for "nightly business report", i'm jackie deangelis. a grim estimate today on the ebola crisis. the world bank calculated the
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price tag and it could top $32 billion in west africa alone. that's if the disease continues to spread. this comes as five u.s. airports say they will screen for ebola on passengers arriving frommest africa and the same day the first ebola patient diagnosed here in the u.s., thomas eric duncan died in a dallas hospital following a long struggle with the virus. >> reporter: duncan may have exposed up to 50 people to the ebola virus in dallas. so far, none of them have shown signs of illness, but the nation's hospitals and airports are on high alert. it's the fear factor that the world bank referred to in its report calling for immediate action in the hardest hit countries, guinea, liberia and sierra leone to stop the epidemic. doing so would discourage other african countries from closing boarders, grounding airline travel and choking commercial
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activity there. the world bank president said today the enormous economic cost of the current outbreak could have been avoided by prudent on going investment in health systems and that's the point secretary of state john kerry was trying to make as he confirmed a commitment of resources and dollars by the united states. >> ebola is an urgent global crisis that demands an urgent global response. it includes providing ebola treatment units, recruiting first responders, and supplying a critical set of medical equipment. >> reporter: earlier this week an nbc news freelance photographer arrived in omaha nebraska for treatment after he tested positive for ebola while working in liberia. in the united states, one other patient had been previously treated and released in omaha
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and three others, including one who remains hospitalized have been treated in atlanta. in europe, a total of eight people have been treated, two of the three in spain have died. no drugs or vaccines have been approved by the fda to treat ebola and only very limited supplies of the drugs being tested are available. the stock that makes the drug used by duncan dropped following the announcement of his death. that same drug is also being given to nbc's freelance photographer in nebraska but until there is a drug or vaccine to fight ebola, the cost of containing it will steady climb. john penzer joins us now. he's the director of macro economics at the world bank group and an author of the study we referred to. sir, welcome. good to have you with us. >> thank you. >> i gather, correct me if i'm
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wrong, that much of the cost that you describe under a worst-case scenario, $33 billion concentrated in west africa is traceable to what you describe as a version behavior that people would engage in in those economies. the economy fund mentally shuts down as people, factors don't travel there are afraid to do business in those nations. could that aversion behavior lead to the collapse of those countries? >> yes, in someways this crisis is not contained in the very short term, we can anticipate an enormous cost for these countries. right now for those countries, we estimate for 2015, the cost, the price cost would be $800 million if this crisis is not contained. this is a very significant amount of money for economies that in total have a gdp of $12 billion. >> john, you also write in your report that you have two
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scenarios, there is a high ebola and low ebola and that has a factor in this price tag that you've put on the cost of the ebola crisis. talk us through the high and low scenarios. >> well, i think the most common scenario, if the crisis is not contained in these three countries, there is a very likely probability that ebola will spread to neighboring countries or other countries in the world as we see now. the most vulnerable countries for the spread of the disease are the neighboring countries because they are the most connected and also because they have health systems that will be very stretched to cope with the disease. in that context, if behavior moves into the west africa region, the economy of nigeria is 40 times larger than the economy of these three countries combined. if this crisis would evolve into
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other countries and would led to aversion behavior across other western african economies, we could estimate then a high cost in terms of lower economic growth which transmits into the $33 billion over 2014 and '15 that you referred to. >> that's what i was going to ask you because you cited $800 million staggering in it's own right but i was going to ask how we get to the 32, $33 billion that's the headline number people are throwing around today and reduced economic output. this is mostly west africa. what happens if this disease moves more broadly global? how does that lever up the potential cost? >> i think that in that case we have to consider whether this is going to lead or not to aversion behavior. at the beginning of the program, you said the cost of treating the disease and of treating the patients and isolating them is
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significant, but it's not staggering in terms of the broader economy. however, if aversion behavior moves to any country, then the cost could elscalate enormously. we think that in places like the united states or europe where you have very strong security and health systems to contain the crisis, you will have a price tag, but if you avoid aversion behavior, economic cost will be very contained. >> thank you very much. we'll, of course, be watching this story as will you over the months ahead. still ahead, alcoa's sup price and what shareholders need to pay attention to. that's next.
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it's not the money bill groves might be used to but it a start. after resigning from fund, he joined janis capital group to run the 13 million dollar bond fund. today we learned investors moved more than $66 million into the fund after he came on board. by contrast, investors pulled out more than $23 billion from gross' former fund. turning to earnings and a strong beat tonight from alcoa. the aluminum giant, alcoa made 31 cents a share eight cents better than estimates and revenue topped forecasts by nearly a half billion on strong demand for aluminum and the aluminum products the company manufactures.
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and ceo is satisfied. >> they are coming in two large contracts, each one over a billion dollars, one coming from pratt and whitney for engine materials and the other coming from boeing, again, 1 billion plus. it's clear aluminum is there to stay and aerospace and growing in places like auto motive. >> shares rose initially in after hours trading as you see on that chart. morgan brennan joins us with more on the earnings. what, morgan, is the big tiake away? >> we see this, something we've talked about on this program played out in the results but i think one of the more surprising take aways is the upstream business, it's mining operations, the production of aluminum. we saw a really strong beat in
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this earnings report and interesting because we've seen aluminum production hit so hard in the recession and it's really flounders since then for alcoa and other aluminum makers and we saw the strongest performance for the primary medals segment since before the downturn and i think at a time when investors are worrying about slowing growth in china, europe teetering on the edge of recession to see stronger output for actual aluminum production is a very promising stat especially in light of the fact the company reiterated the 7% global growth demand outlook for aluminum. >> they have been sticking to that number. >> they have been. it's promising. >> thanks very much. morgan brennan reporting. the 18-month turn around at j.c. penney hitting the brakes and that's where we begin market focus. shares tumbled 6% today after warning that sales last month were weaker than expected and it cut the outlook for a key sales measure for the current quarter.
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jcp lost $1 a share to $8.19. more trouble for another struggling retailer, this one is sears. a report out today said at least one vendor is halting shipments to the department store chain because it couldn't obtain insurance to guarantee it would be paid for the products. the report said three of the biggest firms are reducing coverage, sears calls the report misleading. still shares fell nearly 5% down $1.45 to end the session at $28.85. and a different story for warehouse club costco. it posted fourth quarter net income of nearly $1.6 billion. that's a jump of 14%. the chain added more paying members and sold more food, clothing and school supplies during the important back to school season. shares hit an all-time high today adding $3.46 a share to $128.73. gap shares tumbled on news
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that glen murphy will step down in the next year. murphy over seen a reversal in the long-running sales slump. the stock initially fell about 8% in after hours trading. but it rose more than 1.5% during the regular session to $41.90. narrow than expected fourth quarter loss but the forecast disappointed investors. the world's large seed company says it may tighten up spending on farm supplies, the outline plans for growth and plans to plant seeds in other businesses. investors liked hearing that. shares up $1.99 a piece and closed at $109.73. an activist investor bill ackman plan to increase the offer for allergan. the bid could value the bow tax
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maker, a $4.5 million boost. the move is to keep allergan from striking a rival deal. shares up each. the close at $190.50, valeant finished at $125.90. and at&t is paying to consumer refunds to settle allegations that it added bogus third party charges to cell phone bills. daily horoscopes or trivia never requested. enforcement action for this so-called cramming is the largest in the history of the federal communications commission. at&t shares up, though, nearly 1% to $33.15. citi group is gearing up to spin off the subprime lending unit. one main financial, which makes personal loans to consumers with less than pristine credit is preparing a $50 million initial stock offering. citi group tried but failed to sell the business before and now
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says one name no longer fits with the strategy. switching to politics with under four weeks to go before the midterm elections, and the focus now is on kansas and what some considered to be the most important race in the country, one that could determine whether republicans will take control of the u.s. senate. john harwood joins us with more on this important battle ground. john, first off, tell us who is running and why is this race in a state that is so reliably republican at the center of the campaign? >> fascinating, a republican running that only elected republican sen tomorrows for 80 years but he's 78 and been in washington for a long time. washington is unpopular and a former democrat running as an independent is running an independent candidate saying
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both parties are bad. the democrat dropped out which means the businessman is getting those democratic votes and it's a very unpredictable situation. >> you mentioned he's a businessman. where do the candidates stand on business issues, whether we're talking about taxes and regulation? how different are they? >> very hard to tell right now, susie. they have a debate today before a business group outside of kansas city and they sounded similar. greg orman said i don't like excessive regulation. neither one embraced higher taxes for example. both of them said october needed to be changed, although orman said it's not practical. robert said i'll keep trying. roberts said if you elect this guy, telling fellow conservatives, if you elect him you're turning the agenda to barack obama and harry reid and greg orman said i'll try to make washington work. >> so, john, what is the latest
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information on who is ahead? >> pat roberts is trailing by a few points but he and the chamber have come in with big negative adds to define greg orman as a democrat in disguise and they hope they can overcome the lead. not clear they can do it but we've -- we'll find out over the next 27 days. >> all right, john harwood, thanks very much. jo reporting from wichita. is ibm one step closer to making money off the super computer watson? could this be a revenue generator ibm has been looking for? you may remember watson, the
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super compute there made headlines a few years ago. big blue is betting big on watson with a new home and some new applications. >> reporter: remember ib m's watson? that's the intelligence, ibm opened up headquarters for watson in downtown new york surrounded by google and other hit companies. why the move? ibm is rolling out applications for watson and wants to attract the young hip sound developers to write apps for it. several deals announced today. the founder of travelocity, a company that will allow travel agents and consumers to use a natural language interface so consumers and travel professionals will be able to talk naturally about travel plans and it will make recommendations on flights and hotels and places and destinations. it's part of a very hot area of
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technology called cognitive computing, something like artificial intelligence. they don't think by themselves but capable of learning. they can interact and propose solutions and the technology is getting better very fast. another use watson is being tested for is as an aid to doctors to more quickly and accurately make diagnosis. it will react with information from the doctor's medical exam. the doctor could look at watson that will compare the symptoms to boost a series of possible diagnoses. this is valuable when dealing with diseases which the doctor has little knowledge of. revenues have declined every year since 2011. ibm will discuss how much revenue watson might generate but obviously have big hopes.
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a consulting firm estimates the total market for cognitive computing could exceed $50 billion in less than five years. that's a huge leap forward for this particular business. now, everyone has always asked me the question what does watson look like? the answer is well, it looks like a pizza box. it's about the size of three large pizza boxes. of course, no one is going to deliver watson. it's going to be available as a service in the cloud. one smart pizza box. finally tonight, americans are living longer with life expectancy now the highest ever. a new report from the cdc finds a baby born in 2012 can expect to live nearly 79 years on average, about a month longer than a baby born the previous year thanks to advance treatment and prevention of major diseases, women can expect to live longer than men to more than 81 years compared to 76.5 years for men.
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tyler, you and i will hit 100. >> we'll be here and still be anchoring "nightly business report." >> that's "nightly business report" for tonight, i'm susie gharib. >> i'm tyler mathisen. thanks for being with us. we'll see you back here tomorrow. "nightly business report" has been brought to you in part by,, featuring stephanie link who shares her investment strategies, stock picks and market insights with action alerts plus. the multi million dollar portfolio she manages with jim cramer. you can learn more
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